¶ … internal auditor, the external auditor and the CFO. The essay also reviews their respective responsibilities, inherent conflicts between them and ethical considerations for each. Finally the essay reviews the treatment of balance sheet items from the perspective of each position. The internal auditor typically reports to the CFO and is responsible for reviewing work done by fellow employees, checking for errors, oversights and irregularities. The standard method used to conduct an audit involves examining a transaction or process and comparing how it was done with the way it is documented in an operating procedure or accounting convention, then reporting to management on any differences. The internal auditor may use a number of methods or tools to capture information, sometimes even designing or adapting an existing tool to track the information being reviewed (Blackburn, 2011).

Information presented in the internal auditor's report is vital to management's ability to run a successful business. The internal auditor is responsible for reporting information in a factual, objective manner that is free from emotion or conjecture. This objectivity allows management to decide what action is needed, although the auditor may make recommendations in the audit report (Blackburn, 2011).

In carrying out his or her duties, the individual in this role walks a fine line between management and the other employees with respect to ethical considerations. On one hand, the internal auditor is an employee, and expected to serve the organization; on the other hand, he or she also needs to be able to form sound working relationships with other employees. Skills required to be a good internal auditor include an inquiring mind and the ability to interact with different types of people, along with a thorough understanding of work processes, how they are documented, and the skills to prepare and present management reports (Blackburn, 2011).

An external auditor performs independent, third-party reviews of the financial records of a client's company. He or she evaluates accounting, payroll and purchasing records, as well as documents related to investments, stocks, or loans. The external auditor's job...

No connection to the company is allowed since it could be construed as biasing the auditor's report. The external auditor must not hold stock in the company or have any monetary stake in any of their subsidiaries or holdings (Damewood, 2011).
To be effective, fair and equitable, an external auditor should familiarize him or herself with the nature of the business being audited prior to starting the job. Being aware of differences between industries and types of companies is important for the auditor's conclusions to be accurate and constructive (Damewood, 2011).

Businesses often depend on an external auditor to act as their financial judge and jury. The external auditor's findings can strongly influence the company's reputation in both the private and public sectors. If the auditor's conclusions about assets, debts, and tax responsibilities and payments do not match those on the company records, there can be serious repercussions. If an external auditor finds irregularities, he or she documents them and makes notes on suggested improvements. These findings may relate to accounting methods, internal controls, spending habits or how employees are classified and paid for example. (Damewood, 2011).

In some instances, an external auditor's services are required by a regulatory agency or shareholders with doubts about the accuracy of a company's financial claims. The external auditor is bound to report any evidence that supports their suspicions. Once the audit is completed, the external auditor presents the findings to management. Areas that the report normally covers include the state of accounts payable and receivable, as well as the auditor's opinion of record-keeping systems and the company's financial strength (Damewood, 2011).

The Chief Financial Officer (CFO) supervises the finance unit and is the chief financial spokesperson for the company or organization. The CFO reports directly to the President and Chief Executive Officer (CEO, and also directly assists the Chief Operating Officer (COO) on strategic and…